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Delicately poised

K. Premkumar

THE bears dominated Thursday's proceedings. The trend of the S&P CNX Nifty cash index, however, remained in the uptrend for the 17th calendar day. The sentiment reading also continued to strongly favour the bulls.

For Friday's trading, the uptrend is likely to continue in case of a bull move. However, if the bears were to dominate, the uptrend of the cash index is likely to be stopped and reversed. The trading sentiment is likely to remain the same in case of a bu ll move.

But in case of a bear move, the sentiment is likely to become bearish. This suggests that the cash index is delicately poised at the moment, and that if the bears dominate on Friday, they could also have the sentiment supporting their move. Fresh selling opportunities are likely to exist in many counters on Friday. The best among them is likely to be Reliance.

Index futures watch: The volumes in the index futures are beginning to stabilise, even though they have to improve a lot before a trader makes it his main playing field to test his technical timing skills.

Meanwhile, traders could start trading these contracts to gain experience and prepare themselves to reap the benefits as the instrument gains popularity.

Recommendations have been provided for two types of styles namely non-target based and target-based trading. The non-target-based trading recommendation is the same as that of the scrip recommendations with entries and exits as stop-loss market orders. H owever, target-based trading requires a different type of execution on the part of the trader.

Notice that the entry on both bull and bear sides has stop-loss limit entry prices. This is necessary as the upside is restricted to the target, and hence, the risk to reward becomes unfavourable beyond a certain level viz. the limit levels.

All target orders will have to be placed as normal market orders, while the exit should be placed as a stop-loss market order.

Playing the target-based style also requires a different mindset and pain profile for the trader relative to the non-target- based trading.

Target trading trades will be few in number and a trader should be willing the bear the pain of leaving money on the table. On the positive side, the target trader will be rewarded with a higher strike than the non-target based trader by taking very litt le hit in a non-trending markets.

Scrip watch: The top-20 tradable list remains the same with no new entries. There has been no major change in the ranking of the top-20 list. For the traders having positions in NIIT and Ranbaxy, the stop-loss is placed at 1739.25 and 749.95 respectively .

The sentiment of the market continued to be strongly bullish with a slight decrease in its value. The sentiment is likely to remain the same on Friday in case of a bull move. In case of a bear move, the sentiment is likely to become bearish.

The downtrends triggered in two counters are likely to remain safe in case of a bull move on Friday. In case of a bear move, traders have to watch out for the following counters - Himachal, Satyam, DSQ Software, Global Tele, Infosys, PentaMedia, Wipro, D igital, ITC and Reliance since their uptrends are likely to be neutralised.

Buying opportunities is unlikely to exist for the bulls. Selling opportunities for the bears are likely to exist in Himachal, Global Tele, Infosys, PentaMedia, Wipro, Digital, ITC and Reliance.

The best among these recommended counters is likely to be Reliance. The counter is at present in the buy position. The sell level of the counter is just one rupee away from its last traded value. Hence, a slight bear move on Friday is likely to trigger i ts sell level.

(Note: All price levels refer to the absolute value of the shares traded on the NSE. There is risk of loss in trading.)

The author is a Chennai-based technical analyst and fund management consultant.